Research & Working Papers 2014

Reasons and Attitudes to Using Cash in India

Rajesh Shukla , Rama Bijapurkar , Mridusmita Bordoloi

Working Paper | IBGC Working Paper 14-03

Consumers choose cash because they are keenly aware of its benefits and limitations. ICE360° research shows that most consumers see three main benefits of cash. Cash confers power on the buyer, since she can offer fixed bids for a bundle of goods and services. More than 90% of respondents in every category agree this is the case. Self-control is very important to rural respondents, with more than 80% agreed that cash prevents people from spending too much. Cash transactions are perceived to be fastest, particularly among debit users and Delhi residents. Still, large majorities — about two-thirds of respondents — agree that cash ensures exact payment. In terms of spending location, online shopping was the only category in which a majority of respondents preferred not to use cash. Wealth effects dominate cash balances. Consumer confidence, wealth, financial access, and the levels of cash ceilings and cash floors all correlate in a linear way. Moreover, cash-only consumers know far less about the features of credit card spending.